To retire comfortably, know which moves to make and when to make them

We all want to enjoy a comfortable retirement. But to do so, we
need to make different moves, and consider different issues, at
different times of our lives.

To help illustrate this point, let's look at three individuals:
Alice, who is just starting her career; Bob, who is nearing
retirement; and Charlie, who has recently retired.

Let's start with Alice. As a young worker, Alice most likely has
four decades ahead of her until she retires. Yet she realizes that
it's never too soon to start saving for retirement, so she has
already begun contributing to her 401(k) and to an IRA. And since
she has so much time ahead of her, she has decided to invest
aggressively, putting much of her contributions in growth-oriented
vehicles. The market will certainly have its "dips" in the future,
and Alice's account values could rise and fall from year to year,
but the longer she holds her investments, the less of an impact
market extremes should have on her 401(k), IRA and other
accounts.

Now let's turn our attention to Bob. Since he is within a few years
of retirement, he has some key decisions to make. For one thing, he
must decide if it's time to change the investment mix in his IRA,
401(k) and other accounts. Because Bob doesn't have much time to
overcome market volatility, and since he'd like to maintain the
gains he has already achieved, he may decide to become more
conservative with his investments. Consequently, he may choose to
move some of his investment dollars from stocks to bonds and other
fixed-income securities. Realizing, however, that he may spend two
or three decades in retirement, and knowing that he will need to
stay ahead of inflation, he doesn't abandon all his growth-oriented
investments. Furthermore, Bob decides that he may need to bolster
his retirement income, so he considers whether an annuity, which is
designed to provide him with an income stream he can't outlive, is
appropriate for his situation.

Our final "life stages" investor is Charlie. He has recently
retired, so his biggest concern is making sure he doesn't outlive
his financial resources. Therefore, he may need to consider a
variety of moves. For starters, he should determine when to start
taking Social Security and when to begin taking withdrawals from
his IRA and 401(k) plans (for a traditional IRA and a 401(k) or
other employer-sponsored plan, Charlie, like all investors, must
start taking withdrawals no later than age 70 1/2). After deciding
when to start taking withdrawals from his retirement plans, he'll
also need to calculate how much he can afford to take each year
without emptying the accounts. Finally, he might need to rebalance
his overall investment portfolio to provide himself with more
income.

For help in making the types of choices described above, you may
want to work with a financial professional, but in any case, you
need to be prepared to take the right steps, at the right times, to
enjoy the retirement lifestyle you've envisioned.

• This article was written by Edward Jones for use by
Ahwatukee Foothills. Contact Edward Jones Financial Advisor Joseph
B. Ortiz at (480) 753-7664 or
joseph.ortiz@edwardjones.com.

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